SAFE (simple agreement for future equity) – Setup and Modify

You might know that Eqvista is very easy to use. All the options for issuing shares and convertible notes are available on Eqvista. Here is a step-by-step process for issuing and modifying SAFE convertible notes on Eqvista.

Step 1: Log into your Eqvista account and choose the company account that you want to issue the security from. 

Once you do this, you will be directed to the main dashboard page where you need to click on “Securities” from the left-hand side panel. From this menu, click on “Convertible Instruments”. 

Step 2: Once done, you will be directed to a new page. On this page, you will see all the company’s convertible securities. To create a SAFE, you need to click on the button that says “Issue Instrument” on the top right-hand side.

Step 3: After this, you will be directed to another page where you will need to add the details to set up and issue the SAFE.

You will have to select the shareholder to whom you will be issuing this SAFE security.

Here, you have the option to search for a shareholder or to add a shareholder from here directly. 

Note: You must have the shareholder profile already created. Check out the support article to add a shareholder. If you do not have it created, you can choose the option “Add New Shareholder” here too. 

METHOD 1

If you have already added the shareholder profile in the cap table, you can just type in the name in the search box and the name will appear on the side of it. Click on “Select” and begin the process of issuing the note.

METHOD 2

The second way is by adding a new shareholder profile while issuing a note. This is when you have not added the shareholder profile in the cap table.

A new panel will appear, and select if the shareholder you are adding is an individual or a company. For a company, you will need to add their name and their role. For an individual, you will need to add their first name, the last name, and the person’s role.

Step 4: Once you select the shareholder by searching or adding a new shareholder, three other fields will appear. They are:

• Convertible Note Name
• Issue Date: By default, today’s date and it can be edited.
• Note Type: Here you will need to select the note type, which would be the Y Combinator SAFE. Once you select this option, two other panels will show up with one field in each.

Note: A SAFE is also called the Y Combinator SAFE. On Eqvista, you will find three types – SAFE, Y Combinator SAFE – Pre Money, and Y Combinator SAFE – Post Money.

Step 5: Once you add the details of the Note Type, two fields will appear. The first field below is for filling out the principal amount, which is the amount the company borrows from the security holder.

The second field is – Converts to: This is the type of stock the convertible note converts to. Choose from common or preferred stock. Select the kind of stock that the convertible note would turn into. In this case, we selected common stock.

Step 6: As you select the type of shares that the security converts to, some other fields appear, including:

• Conversion Trigger Amount: This is the minimum amount that will trigger the conversion rate.
• Valuation Cap: The maximum company valuation when converting the note to shares. There is also an option “No Valuation Cap”.
• Early Exit Multiple: This is the guaranteed multiplied of the principal paid out.
• Conversion Discount: This is the discount applied on the purchase of shares during the valuation of the company.

Fill in all the details based on your plan and click on “Submit”.

Step 7: After this, you will be directed to the page showing the details of this SAFE you just issued. From here, click on “Actions” and a drop-down menu will appear. There are four options for altering the SAFE security here. This includes:

• Edit Note: For editing or modifying a part of the security.
• Convert to Stock: This is to convert the note to stock manually before the maturity date.
• Repay: For repaying the security. 
• Mark as Converted: In case you have already converted the note to stock for the investor, you can mark it converted here easily.
• Delete Note: This is to delete the security in case the deal goes off with the investor or for any other reason.

If you would like to edit the convertible note, click on “Edit Security”.

Step 8: A window will appear where you can change the details of the SAFE security.

Once you are done with adding and editing the details, click on “Save”.

Step 9: By selecting “Save”, you will be directed to the next page that shows the details of the SAFE as shown below.

Like this, you can both set up, issue, and modify a SAFE on Eqvista. 

If you want to know more or understand any other process, check out our other support articles here or contact us today!